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This is a guide for those who are unfamiliar with this hobby and the whole “miles and points” game. So, why do it in the first place? If you are an average family, you are probably putting no more than $24,000 on credit cards each year.

If you used a miles earning credit card, that amount would not give you enough rewards for even one economy roundtrip ticket within the continental U.S. on most airlines.

If, however, you put your limited spending towards signing up for new cards continuously throughout the year, you could potentially get enough miles and points to pay for a trip to Europe for a family of 4 and have some points leftover.

That is exactly what my family had been doing for a long time. In fact, in last year alone, I have acquired close to a million miles and points, all through our regular spending of just $24,000 per year.

First things first. This hobby is not for you if the following applies:

1. You are currently in debt and have a hard time managing it.

2. You tend to overspend when dealing with credit cards.

3. You have a mortgage or a major loan coming up within two years. At two-year mark, credit inquiries fall off and the lenders don’t see them anymore.

4. You have had bankruptcy or a short sale in the last few years.

None of those things apply to you? Perfect! Here are some facts:

1. While your score will probably go down somewhat with each application, it’s usually a small amount, between 5-10 points. However, younger people may see a bigger drop since they have a short history. That’s why it’s important to go slow and apply for just one card to begin with, so you can see the impact on your credit. The score normally recovers after 3 months, though no guarantees. As long as it stays above the 700 mark, your credit is still in the “Good” category.

Look at the factors in the pie chart that affect the score.The biggest ones are “Payment history” (paying your bills on time and lack of delinquency) and “Amount used” (percentage you put on your credit cards each month relative to your available credit, also referred to as utilization).

So to put it in simple terms, as long as you don’t max out your cards and pay your bills on time each month, your credit score should be fairly healthy. That makes you a good candidate for this hobby.

The factors that are affected by new credit applications are “Length” (length of your credit history, which goes down with each application) and “New” (inquiries from the banks when they check your score). However, something to keep in mind: When you get a new card, in turn, you will have more available credit.

That can decrease your utilization and actually increase your score. Sounds crazy, but it happens fairly often. I got 6 cards in the last year alone, and my official FICO score is currently 780, which falls into “excellent” category.

2. You should keep your new card open for at least 6 months. Some issuers, like Chase, state in the terms that they will take the points back if you don’t. So, it’s better to to be on a safe side. The cards with no annual fees don’t need to be closed, period.

That’s because they help to increase your credit length history. Those with annual fees will need to be evaluated individually. Some are worth keeping, especially if they provide a perk, like a hotel night upon renewal. Most cards can be canceled through secure message in your online profile, so no need to call.

3. Both husband and a wife can apply for a credit card in their individual names, so they can double-dip on rewards.

4. Some bonuses can be gotten multiple times, some only once. That’s why it’s very important to get the very best offer. However, if the card changes, you can usually apply for it again. Read my post The issues of timing and applying for credit cards

Let me list some tools and websites that will help you keep track of miles and points:

1. Create a spreadsheet so you can keep track of the dates when you applied for the new cards as well as minimum spending requirements. When the terms say you have to spend 1000 dollars in 3 months, the clock starts on the day of your application, not when you receive the card.

2. Mint.com An excellent, free site to keep track of your credit cards as well as checking, savings accounts and CDs. I use it myself and really like it. It’s essential to check your credit cards occasionally, especially if you have 30 of them like I do.

3. Sign up for Creditkarma account as well as Creditsesame. The first one tracks Transunion credit agency and the second one Experian. I will say that I found Creditkarma to be more accurate. But both are good (and free) tools to estimate your credit score and see changes in your credit history.

I recommend you don’t apply for any cards if your score is not around 730 on both. That way, you have a good buffer in case of an unexpected dip.

4. Once a year you are allowed to access your credit report for free from all 3 credit agencies. You can make sure everything is correct and all your accounts report in good standing. You can access it via thisLINK

5. Sign up for Awardwallet account to keep track of your miles and points balances. Your miles expire when there is no activity for a certain amount of time, usually 18 months. You can avoid it by making a small purchase through the airline shopping portal or redeeming miles for a magazine subscription.

7. Even if your credit application is denied, not all is lost. You can call that bank’s reconsideration number and try to reverse it by speaking to a credit analyst. I have been successful almost every time I called. Sometimes you can get an approval by shifting the credit from another card that you have with that particular bank.

8. You can check the points requirement for different hotels via Awardmapper tool

9. Check Cashbackmonitor website that compares different shopping portal payouts. Always make sure you get miles, points or cash back when making purchases. You should also be on a lookout for pre-approved credit card offers from various banks, which can sometimes be higher than public offers.

10. Probably obvious, but always collect miles and points by signing up for loyalty programs. Even if it’s a small amount now, someday it can make a difference between getting an award ticket and not getting it.

Well, I think this is it for now. Check out our Hot Deals page to see specific bonus recommendations. Also, miles and points are great, but sometimes it makes sense to just book tickets or hotels by paying cash. I have put a list together featuring some helpful websites HERE

Don’t hesitate to send me an email to milesforfamily@gmail.com if you have any additional questions.

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